10-Q 1 a2200785z10-q.htm 10-Q

Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2010

Commission file number 1-9924

Citigroup Inc.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of incorporation or organization)
  52-1568099
(I.R.S. Employer Identification No.)

399 Park Avenue, New York, NY
(Address of principal executive offices)

 

10043
(Zip code)

(212) 559-1000
(Registrant's telephone number, including area code)

        Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý    No o

        Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý    No o

        Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ý   Accelerated filer o   Non-accelerated filer o
(Do not check if a smaller
reporting company)
  Smaller reporting company o

        Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o    No  ý

        Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date:

Common stock outstanding as of October 31, 2010: 29,050,168,996

Available on the web at www.citigroup.com


Table of Contents

1


CITIGROUP INC.

THIRD QUARTER 2010—FORM 10-Q

OVERVIEW

    3  

CITIGROUP SEGMENTS AND REGIONS

   
4
 

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

   
5
 

EXECUTIVE SUMMARY

   
5
 

Overview of Results

   
5
 

SUMMARY OF SELECTED FINANCIAL DATA

   
7
 

SEGMENT, BUSINESS AND PRODUCT—INCOME (LOSS) AND REVENUES

   
9
 
   

Citigroup Income (Loss)

   
9
 
   

Citigroup Revenues

   
10
 

CITICORP

   
11
 
 

Regional Consumer Banking

   
12
 
     

North America Regional Consumer Banking

   
13
 
     

EMEA Regional Consumer Banking

   
15
 
     

Latin America Regional Consumer Banking

   
17
 
     

Asia Regional Consumer Banking

   
19
 
 

Institutional Clients Group

   
21
 
     

Securities and Banking

   
22
 
     

Transaction Services

   
24
 

CITI HOLDINGS

   
25
 
 

Brokerage and Asset Management

   
26
 
 

Local Consumer Lending

   
27
 
 

Special Asset Pool

   
29
 

CORPORATE/OTHER

   
32
 

SEGMENT BALANCE SHEET

   
33
 

CAPITAL RESOURCES AND LIQUIDITY

   
34
 
   

Capital Resources

   
34
 
   

Funding and Liquidity

   
40
 

OFF-BALANCE-SHEET ARRANGEMENTS

   
44
 

MANAGING GLOBAL RISK

   
45
 
   

Credit Risk

   
45
 
       

Loan and Credit Overview

   
45
 
       

Loans Outstanding

   
46
 
       

Details of Credit Loss Experience

   
47
 
       

Impaired Loans, Non-Accrual Loans and Assets, and Renegotiated Loans

   
48
 
       

Non-Accrual Loans and Assets

   
49
 
       

U.S. Consumer Mortgage Lending

   
52
 
       

Consumer Loan Details

   
62
 
         

Consumer Loan Delinquency Amounts and Ratios

   
62
 
         

Consumer Loan Net Credit Losses and Ratios

   
63
 
         

Consumer Loan Modification Programs

   
64
 
       

Consumer Mortgage Representations and Warranties

   
69
 
       

S&B Representations and Warranties

   
72
 
       

Corporate Credit Portfolio

   
73
 
   

Market Risk

   
76
 
       

Average Rates—Interest Revenue, Interest Expense, and Net Interest Margin

   
78
 
       

Average Balances and Interest Rates—Assets

   
79
 
       

Average Balances and Interest Rates—Liabilities and Equity, and Net Interest Revenue

   
80
 
       

Analysis of Changes in Interest Revenue

   
83
 
       

Analysis of Changes in Interest Expense and Net Interest Revenue

   
84
 
       

Analysis of Changes in Interest Revenue, Interest Expense and Net Interest Revenue

   
85
 

CROSS BORDER RISK AND SOVEREIGN EXPOSURE

   
86
 

DERIVATIVES

   
87
 

INCOME TAXES

   
89
 

RECLASSIFICATION OF HELD-TO-MATURITY (HTM) SECURITIES TO AVAILABLE-FOR-SALE (AFS)

   
90
 

EXPOSURE TO COMMERCIAL REAL ESTATE

   
91
 

CONTRACTUAL OBLIGATIONS

   
92
 

CONTROLS AND PROCEDURES

   
92
 

FORWARD-LOOKING STATEMENTS

   
93
 

TABLE OF CONTENTS FOR FINANCIAL STATEMENTS AND NOTES

   
94
 

CONSOLIDATED FINANCIAL STATEMENTS

   
96
 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

   
105
 

OTHER INFORMATION

   
204
 
   

Item 1. Legal Proceedings

   
204
 
   

Item 1A. Risk Factors

   
206
 
   

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

   
207
 
   

Item 6. Exhibits

   
208
 
   

Signatures

   
209
 
   

Exhibit Index

   
210
 

2


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OVERVIEW

Introduction

        Citigroup's history dates back to the founding of Citibank in 1812. Citigroup's original corporate predecessor was incorporated in 1988 under the laws of the State of Delaware. Following a series of transactions over a number of years, Citigroup Inc. was formed in 1998 upon the merger of Citicorp and Travelers Group Inc.

        Citigroup is a global diversified financial services holding company whose businesses provide consumers, corporations, governments and institutions with a broad range of financial products and services. Citi has approximately 200 million customer accounts and does business in more than 160 countries and jurisidictions.

        Citigroup currently operates, for management reporting purposes, via two primary business segments: Citicorp, consisting of Citi's Regional Consumer Banking businesses and Institutional Clients Group; and Citi Holdings, consisting of Citi's Brokerage and Asset Management and Local Consumer Lending businesses, and a Special Asset Pool. There is also a third segment, Corporate/Other. For a further description of the business segments and the products and services they provide, see "Citigroup Segments" below, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Note 3 to the Consolidated Financial Statements.

        Throughout this report, "Citigroup" and "Citi" refer to Citigroup Inc. and its consolidated subsidiaries.

        This Quarterly Report on Form 10-Q should be read in conjunction with Citigroup's Annual Report on Form 10-K for the year ended December 31, 2009 (2009 Annual Report on Form 10-K), Citigroup's updated 2009 historical financial statements and notes filed on Form 8-K with the Securities and Exchange Commission (SEC) on June 25, 2010 and Citigroup's Quarterly Reports on Form 10-Q for the quarters ended March 31, 2010 and June 30, 2010. Additional information about Citigroup is available on the company's Web site at www.citigroup.com. Citigroup's recent annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, as well as its other filings with the SEC are available free of charge through the company's Web site by clicking on the "Investors" page and selecting "All SEC Filings." The SEC's Web site also contains periodic and current reports, proxy and information statements, and other information regarding Citi at www.sec.gov.

        Certain reclassifications have been made to the prior periods' financial statements to conform to the current period's presentation.

        Within this Form 10-Q, please refer to the tables of contents on pages 2 and 94 for page references to Management's Discussion and Analysis of Financial Condition and Results of Operations and Notes to Consolidated Financial Statements, respectively.

Impact of Adoption of SFAS 166/167

        Effective January 1, 2010, Citigroup adopted Accounting Standards Codification (ASC) 860, Transfers and Servicing, formerly SFAS No. 166, Accounting for Transfers of Financial Assets, an amendment of FASB Statement No. 140 (SFAS 166), and ASC 810, Consolidations, formerly SFAS No. 167, Amendments to FASB Interpretation No. 46(R) (SFAS 167). Among other requirements, the adoption of these standards includes the requirement that Citi consolidate certain of its credit card securitization trusts and eliminate sale accounting for transfers of credit card receivables to those trusts. As a result, reported and managed-basis presentations are comparable for periods beginning January 1, 2010. For comparison purposes, prior period revenues, net credit losses, provisions for credit losses and for benefits and claims and loans are presented on a managed basis in this Form 10-Q. Managed presentations were applicable only to Citi's North American branded and retail partner credit card operations in North America Regional Consumer Banking and Citi Holdings—Local Consumer Lending and any aggregations in which they are included. See "Capital Resources and Liquidity" and Note 1 to the Consolidated Financial Statements for an additional discussion of the adoption of SFAS 166/167 and its impact on Citigroup.

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As described above, Citigroup is managed pursuant to the following segments:

GRAPHIC

        The following are the four regions in which Citigroup operates. The regional results are fully reflected in the segment results above.

GRAPHIC


(1)
Asia includes Japan, Latin America includes Mexico, and North America comprises the U.S., Canada and Puerto Rico.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

THIRD QUARTER 2010 EXECUTIVE SUMMARY

Overview of Results

        During the third quarter of 2010, Citigroup continued its focus on (i) strengthening and investing in its core assets and businesses in Citicorp, (ii) building and maintaining its financial strength, including maintaining its capital, liquidity and continued expense discipline, and (iii) winding down Citi Holdings as quickly as practicable in an economically rational manner.

        For the quarter, Citigroup reported net income of $2.2 billion, or $0.07 per diluted share. Results for the quarter included a $435 million (after tax) loss related to the announced sale of The Student Loan Corporation (SLC), which is reflected in discontinued operations for the third quarter of 2010. Revenues of $20.7 billion decreased 10% from comparable year-ago levels. The decline in revenues was due to lower revenues in Citi Holdings (driven by a declining loan balance in Local Consumer Lending and lower positive net revenue marks in the Special Asset Pool) and lower Securities and Banking revenues excluding Credit Valuation Adjustment (CVA), offset by positive CVA of $99 million in the third quarter of 2010 (versus negative CVA of $1.8 billion in the prior-year period). Citicorp's net income was $3.5 billion; Citi Holdings had a net loss of $1.1 billion.

        In Citicorp, Securities and Banking revenues, excluding CVA, were $5.5 billion in the third quarter of 2010, down 17% from the prior-year period. While overall client market activity remained muted in the third quarter of 2010, Citi continued to benefit from consistent growth in Securities and Banking emerging markets revenues. Fixed income markets revenues excluding CVA were $3.4 billion compared to $4.9 billion in the third quarter of 2009. Equity markets revenues excluding CVA were $1.1 billion, compared to $1.3 billion in the prior-year quarter. Investment banking revenues declined 20% from the prior-year period to $930 million. Lending revenues were negative $18 million in the third quarter of 2010, compared with a negative $794 million in the third quarter of 2009.

        Regional Consumer Banking revenues were up $241 million on a comparable basis from the prior-year quarter to $8.2 billion, driven by growth in Latin America and Asia.

        Transaction Services revenues were up from year-ago levels by 3% to $2.5 billion, also driven by growth in Latin America and Asia.

        Within Citi Holdings, Local Consumer Lending revenues of $3.5 billion in the third quarter of 2010 were down 33% on a comparable basis from the year-ago period, driven by a lower loan balance and continued asset sales, as well as the addition of $322 million of mortgage repurchase reserves related to North America residential real estate (compared to a build of $33 million in the prior-year period).

        Revenues in the Special Asset Pool decreased to $0.3 billion in the third quarter of 2010, from $1.4 billion in the prior-year period, largely driven by lower positive net revenue marks of $567 million in the third quarter of 2010, compared to $1,517 million in the same quarter of 2009.

        Citi's Net interest revenue increased 10% from the third quarter of 2009, primarily driven by the impact from the adoption of SFAS 166/167. Sequentially, Citi's net interest margin (NIM) of 3.07% decreased by 8 basis points primarily due to the continued run-off and sales of higher-yielding assets in Citi Holdings and investments in lower-yielding securities, given current rates.

        Non-interest revenue decreased 11% from the year-ago period reflecting lower revenues on mortgage servicing rights, partially offset by higher realized gains on investment securities.

        Operating expenses decreased 3% from the year-ago quarter and were down 3% from the second quarter of 2010. The decline in expenses from the year-ago quarter reflected the decrease in Citi Holdings expenses, which more than offset the increase in Citicorp expenses resulting from continued investments in the Citicorp businesses. The sequential decline in expenses primarily related to the absence of the U.K. bonus tax in the second quarter of 2010, partially offset by ongoing investments in Citicorp businesses. Citi's full-time employees numbered 258,000 at September 30, 2010, down 18,000 from September 30, 2009 and down 1,000 from June 30, 2010.

        Net credit losses of $7.7 billion in the third quarter of 2010 were down 30% from year-ago levels on a comparable basis, and down 4% from the second quarter of 2010. Net credit losses (NCLs) improved for the fifth consecutive quarter. Consumer NCLs of $6.7 billion were down 29% on a comparable basis from the prior-year period and down 10% from the prior quarter. While North America NCLs continued to represent over 80% of Citi's total consumer NCLs, during the third quarter of 2010, losses in North America improved at a faster rate than in Citi's international consumer businesses. North America consumer NCLs were down 11% sequentially, while international consumer NCLs declined by 7%.

        Corporate NCLs of $922 million were down 40% from the prior-year period and up 95% from the prior quarter. The sequential increase in corporate NCLs was principally due to a charge-off on a specific corporate credit in Citicorp, and, in Citi Holdings, higher cost of loan sales and the charge-off of loans for which Citi had previously established specific SFAS 114 reserves that were released during the third quarter of 2010 upon recognition of the charge-off.

        Citi's total allowance for loan losses was $43.7 billion at September 30, 2010, or 6.73% of total loans. The percentage was essentially flat compared to June 30, 2010, which was 6.72% of total loans. During the third quarter of 2010, Citi had a net release of $2.0 billion to its credit reserves and allowance for unfunded lending commitments, compared to a net build of $802 million in the third quarter of 2009 and a net release of $1.5 billion in the second quarter of 2010. An improving to stabilizing credit environment contributed to the release during the current quarter. Citi experienced continued improvement in NCLs and 90 days or more delinquencies across its North America cards portfolios (both branded and Retail partner

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cards) and North America mortgage portfolio in Citi Holdings during the third quarter of 2010.

        The total allowance for consumer loan losses decreased $2.0 billion to $37.6 billion at the end of the quarter, but increased as a percentage of total consumer loans to 8.16%, compared to 7.87% at the end of the second quarter of 2010. The increase in the percentage was mainly due to the announced sale of SLC, which moved approximately $30 billion of loans to held-for-sale. The decrease in the total allowance was mainly due to a net release of $1.4 billion as well as reductions from asset sales in the U.S. real estate lending portfolio and certain loan portfolios moving to held-for-sale. The $1.4 billion net release was mainly driven by Retail partner cards in Citi Holdings, as well as the international Regional Consumer Banking businesses in Citicorp.

        The total allowance for loan losses for funded corporate loans declined by $552 million to $6.1 billion at September 30, 2010, or 3.22% of corporate loans, down from 3.59% in the second quarter of 2010. Corporate non-accrual loans were $9.9 billion at September 30, 2010, compared to $11.0 billion at June 30, 2010 and $14.7 billion in the year-ago period. The decrease in non-accrual loans from the prior quarter was mainly due to loan sales, write-offs and paydowns, which were partially offset by increases due to the weakening of certain borrowers.

        The effective tax rate on continuing operations for the third quarter of 2010 was 21%, reflecting taxable earnings in lower tax rate jurisdictions, as well as tax advantaged earnings.

        Total deposits were $850 billion at September 30, 2010, up 4% from June 30, 2010 and up 2% from year-ago levels. Citi's structural liquidity (equity, long-term debt and deposits as a percentage of assets) was 71% at September 30, 2010, unchanged as compared with June 30, 2010 and down slightly from 72% at September 30, 2009.

        Total assets increased $46 billion from the end of the second quarter of 2010 to $1,983 billion. Citi Holdings assets decreased $44 billion during the third quarter of 2010, consisting of approximately $32 billion of asset sales and business dispositions, $9 billion of net run-off and pay downs and $3 billion of net cost of credit and net asset marks. Citi Holdings total GAAP assets of $421 billion at September 30, 2010, represented 21% of Citi's total GAAP assets. Citi Holdings' risk-weighted assets were approximately $370 billion, or approximately 37% of Citi's risk-weighted assets, as of September 30, 2010.

        Citigroup's Total stockholders' equity increased by $8.1 billion during the third quarter of 2010 to                                     $162.9 billion, reflecting net income during the quarter, $1.9 billion related to the ADIA share issuance and a $3.9 billion improvement in Accumulated other comprehensive income largely from foreign exchange translation (generally referred to throughout this report as "FX translation"). Citigroup's total equity capital base and trust preferred securities were $183.4 billion at September 30, 2010. Citigroup maintained its "well-capitalized" position with a Tier 1 Capital ratio of 12.50% at September 30, 2010, up from 11.99% at June 30, 2010. Citigroup's Tier 1 Common ratio was 10.33% at September 30, 2010, compared to 9.71% at June 30, 2010.

Business Outlook

        Within Citicorp, overall trends in client activity and the global economic and capital markets environment are expected to continue to drive Citi's Securities and Banking revenues.

        Citi expects continued headwinds in North America Regional Consumer Banking from The Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act), which will continue to have a negative impact on U.S. credit card revenues. Citi currently estimates that the CARD Act will have a net pre-tax impact on Citi-branded cards for the full year 2010 at the lower end of its previously disclosed range of $400 million to $600 million. As previously disclosed, for Retail partner cards in Local Consumer Lending, Citi's full-year 2010 estimate of negative net revenue impact resulting from the CARD Act is approximately $150 million to $200 million. Within the international businesses in Regional Consumer Banking, Citi believes revenues should begin to reflect the growth Citi is seeing in the underlying revenue drivers, such as new loan and deposit growth.

        Within Citi Holdings, Citi currently believes Local Consumer Lending revenues should continue to decline given the shrinking loan balance resulting from paydowns and continued asset sales. Citi further believes that net revenue marks in the Special Asset Pool, which have been positive for the last six quarters, will remain episodic.

        NIM will likely remain under pressure throughout the remainder of the year.

        With respect to expenses, Citi expects quarterly expenses to continue to be in the range of $11.5 billion to $12 billion. As previously disclosed, Citicorp's expenses may continue to increase, reflecting ongoing investments in its core businesses, while in Citi Holdings expenses should continue to decline as assets are reduced.

        As in recent prior quarters, credit costs are expected to remain a significant component of earnings performance in the fourth quarter. In North America cards, Citi expects NCLs will continue to improve modestly for both portfolios, but likely remain at elevated levels until employment recovers in the U.S. In North America mortgages, Citi remains cautious as the improvement in NCLs and delinquency metrics to date reflects asset sales and loss mitigation efforts. Mortgages also remain at risk to economic factors, including unemployment, home prices, government programs, and foreclosure regulations. Internationally, Citi believes consumer NCLs should remain fairly stable in the fourth quarter.

        Consumer loan loss reserve balances will continue to reflect the losses embedded in Citi's consumer portfolios, given underlying credit trends and loss mitigation efforts. The recognition of credit losses and the build or release of loan loss reserves in Citi's corporate credit portfolio will continue to be episodic.

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CITIGROUP INC. AND SUBSIDIARIES

SUMMARY OF SELECTED FINANCIAL DATA—Page 1

 
  Third Quarter    
  Nine Months Ended    
 
In millions of dollars,
except per share amounts
  %
Change
  %
Change
 
  2010   2009   2010   2009  

Total managed revenues(1)

  $ 20,738   $ 23,142     (10 )% $ 68,230   $ 83,210     (18 )%

Total managed net credit losses(1)

    7,659     10,982     (30 )   24,005     32,282     (26 )
                           

Net interest revenue

  $ 13,246   $ 11,998     10 % $ 41,846   $ 37,753     11 %

Non-interest revenue

    7,492     8,392     (11 )   26,384     37,127     (29 )
                           

Revenues, net of interest expense

  $ 20,738   $ 20,390     2 % $ 68,230   $ 74,880     (9 )%

Operating expenses

    11,520     11,824     (3 )   34,904     35,508     (2 )

Provisions for credit losses and for benefits and claims

    5,919     9,095     (35 )   21,202     32,078     (34 )
                           

Income (loss) from continuing operations before income taxes

  $ 3,299   $ (529 )   NM   $ 12,124   $ 7,294     66 %

Income taxes (losses)

    698     (1,122 )   NM     2,546     620     NM  
                           

Income from continuing operations

  $ 2,601   $ 593     NM   $ 9,578   $ 6,674     44 %

Loss from discontinued operations, net of taxes

    (374 )   (418 )   11     (166 )   (677 )   75  
                           

Net income before attribution of noncontrolling interests

  $ 2,227   $ 175     NM   $ 9,412   $ 5,997     57 %

Net income attributable to noncontrolling interests

    59     74     (20 )   119     24     NM  
                           

Citigroup's net income

  $ 2,168   $ 101     NM   $ 9,293   $ 5,973     56 %
                           

Less:

                                     
 

Preferred dividends—Basic

      $ 272             $ 2,988        
 

Impact of the conversion price reset related to the $12.5 billion convertible preferred stock private issuance—Basic(2)

                      1,285        
 

Preferred stock Series H discount accretion—Basic

        16               123        
 

Impact of the Public and Private preferred stock exchange offer(2)

        3,055               3,055        
 

Dividends and earnings allocated to participating securities, net of forfeitures applicable to Basic EPS

    20               78     2        
                           

Income (loss) allocated to unrestricted common shareholders for basic EPS

  $ 2,148   $ (3,242 )   NM   $ 9,215   $ (1,480 )   NM  
 

Less: Convertible Preferred Stock Dividends

                    540        
 

Add: Incremental dividends and earnings allocated to participating securities, net of forfeitures applicable to Diluted EPS

    1               2            
                           

Income (loss) allocated to unrestricted common shareholders for diluted EPS

  $ 2,149   $ (3,242 )   NM   $ 9,217   $ (940 )   NM  

Earnings per share

                                     
 

Basic(3)

                                     
 

Income (loss) from continuing operations

  $ 0.09   $ (0.23 )   NM   $ 0.32   $ (0.10 )   NM  
 

Net income (loss)

    0.07     (0.27 )   NM     0.32     (0.19 )   NM  
                           
 

Diluted(3)

                                     
 

Income (loss) from continuing operations

  $ 0.08   $ (0.23 )   NM   $ 0.32   $ (0.10 )   NM  
 

Net income (loss)

    0.07     (0.27 )   NM     0.31     (0.19 )   NM  
                           

[Continued on the following page, including notes to table.]

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SUMMARY OF SELECTED FINANCIAL DATA—Page 2

 
   
   
   
  Nine Months Ended September 30,    
 
 
  Third Quarter    
   
 
 
  %
Change
  %
Change
 
In millions of dollars   2010   2009   2010   2009  

At September 30:

                                     

Total assets

  $ 1,983,280   $ 1,888,599     5 %                  

Total deposits

    850,095     832,603     2                    

Long-term debt

    387,330     379,557     2                    

Mandatorily redeemable securities of subsidiary Trusts (included in Long-term debt)

    20,449     34,531     (41 )                  

Common stockholders' equity

    162,601     140,530     16                    

Total stockholders' equity

    162,913     140,842     16                    

Direct staff (in thousands)

    258     276     (7 )                  
                           

Ratios:

                                     

Return on common stockholders' equity(4)

    5.4 %   (12.2 )%         8.1 %   (2.3 )%      
                           

Tier 1 Common(5)

    10.33 %   9.12 %                        

Tier 1 Capital

    12.50     12.76                          

Total Capital

    16.14     16.58                          

Leverage(6)

    6.57     6.85                          
                           

Common stockholders' equity to assets

    8.20 %   7.44 %                        

Ratio of earnings to fixed charges and preferred stock dividends

    1.53     0.95           1.63     1.16        
                           

(1)
See discussion of adoption of SFAS 166/167 on page 3 and in Note 1 to the Consolidated Financial Statements.

(2)
For the nine months ended September 30, 2009, Income (loss) allocated to unrestricted common stockholders includes a reduction of $1.285 billion related to a conversion price reset pursuant to Citigroup's prior agreement with the purchasers of $12.5 billion of convertible preferred stock issued in a private offering in January 2008. The conversion price was reset from $31.62 per share to $26.35 per share. There was no impact to net income, total stockholders' equity or capital ratios due to the reset. However, the reset resulted in a reclassification from Retained earnings to Additional paid-in capital of $1.285 billion and a reduction in Income allocated to unrestricted common stockholders of $1.285 billion. The 2009 third quarter Income (loss) allocated to unrestricted common stockholders includes a reduction of $3.055 billion related to the preferred stock exchanged for common stock and trust preferred securities as part of the exchange offers.

(3)
The Diluted EPS calculation for the third quarter and full year of 2009 utilize Basic shares and Income allocated to unrestricted common stockholders (Basic) due to the negative Income allocated to unrestricted common stockholders. Using Diluted shares and Income allocated to unrestricted common stockholders (Diluted) would result in anti-dilution.

(4)
The return on average common stockholders' equity is calculated using income (loss) available to common stockholders.

(5)
As defined by the banking regulators, the Tier 1 Common ratio represents Tier 1 Capital less qualifying perpetual preferred stock, qualifying noncontrolling interests in subsidiaries and qualifying mandatorily redeemable securities of subsidiary trusts divided by risk-weighted assets.

(6)
The Leverage ratio represents Tier 1 Capital divided by each period's quarterly adjusted average total assets.

NM
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SEGMENT, BUSINESS AND PRODUCT—INCOME (LOSS) AND REVENUES

        The following tables show the income (loss) and revenues for Citigroup on a segment, business and product view:


CITIGROUP INCOME (LOSS)

 
  Third Quarter    
  Nine Months    
 
 
  %
Change
  %
Change
 
In millions of dollars   2010   2009   2010   2009  

Income (loss) from Continuing Operations

                                     

CITICORP

                                     

Regional Consumer Banking

                                     
 

North America

  $ 147   $ 206     (29 )% $ 231   $ 702     (67 )%
 

EMEA

    22     (23 )   NM     99     (166 )   NM  
 

Latin America

    558     77     NM     1,438     412     NM  
 

Asia

    505     444     14 %   1,655     971     70  
                           
   

Total

  $ 1,232   $ 704     75 % $ 3,423   $ 1,919     78 %
                           

Securities and Banking

                                     
 

North America

  $ 456   $ 7     NM   $ 2,719   $ 2,472     10 %
 

EMEA

    505     550     (8 )%   1,892     3,467     (45 )
 

Latin America

    266     219     21     735     1,158     (37 )
 

Asia

    180     71     NM     952     1,724     (45 )
                           
   

Total

  $ 1,407   $ 847     66 % $ 6,298   $ 8,821     (29 )%
                           

Transaction Services

                                     
 

North America

  $ 131   $ 152     (14 )% $ 456   $ 471     (3 )%
 

EMEA

    305     308     (1 )   929     984     (6 )
 

Latin America

    171     148     16     481     458     5  
 

Asia

    318     331     (4 )   934     904     3  
                           
   

Total

  $ 925   $ 939     (1 )% $ 2,800   $ 2,817     (1 )%
                           

Institutional Clients Group

  $ 2,332   $ 1,786     31 % $ 9,098   $ 11,638     (22 )%
                           

Total Citicorp

  $ 3,564   $ 2,490     43 % $ 12,521   $ 13,557     (8 )%
                           

CITI HOLDINGS

                                     

Brokerage and Asset Management

  $ (147 ) $ 90     NM   $ (154 ) $ 6,899     NM  

Local Consumer Lending

    (827 )   (2,142 )   61 %   (3,895 )   (8,060 )   52 %

Special Asset Pool

    (80 )   58     NM     922     (5,136 )   NM  
                           

Total Citi Holdings

  $ (1,054 ) $ (1,994 )   47 % $ (3,127 ) $ (6,297 )   50 %
                           

Corporate/Other

  $ 91   $ 97     (6 )% $ 184   $ (586 )   NM  
                           

Income from continuing operations

  $ 2,601   $ 593     NM   $ 9,578   $ 6,674     44 %
                           

Discontinued operations

  $ (374 ) $ (418 )       $ (166 ) $ (677 )      

Net income attributable to noncontrolling interests

    59     74           119     24        
                           

Citigroup's net income

  $ 2,168   $ 101     NM   $ 9,293   $ 5,973     56 %
                           

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CITIGROUP REVENUES(1)

 
  Third Quarter    
  Nine Months    
 
 
  %
Change
  %
Change
 
In millions of dollars   2010   2009   2010   2009  

CITICORP

                                     

Regional Consumer Banking

                                     
 

North America

  $ 3,740   $ 2,017     85 % $ 11,234   $ 6,702     68 %
 

EMEA

    349     415     (16 )   1,130     1,169     (3 )
 

Latin America

    2,233     1,971     13     6,427     5,845     10  
 

Asia

    1,839     1,717     7     5,484     4,958     11  
                           
   

Total

  $ 8,161   $ 6,120     33 % $ 24,275   $ 18,674     30 %
                           

Securities and Banking

                                     
 

North America

  $ 2,203   $ 1,301     69 % $ 8,383   $ 8,038     4 %
 

EMEA

    1,733     2,202     (21 )   6,010     8,982     (33 )
 

Latin America

    639     705     (9 )   1,804     2,554     (29 )
 

Asia

    1,018     683     49     3,354     4,218     (20 )
                           
   

Total

  $ 5,593   $ 4,891     14 % $ 19,551   $ 23,792     (18 )%
                           

Transaction Services

                                     
 

North America

  $ 620   $ 643     (4 )% $ 1,895   $ 1,888      
 

EMEA

    835     845     (1 )   2,516     2,549     (1 )%
 

Latin America

    384     337     14     1,084     1,020     6  
 

Asia

    696     632     10     1,979     1,857     7  
                           
   

Total

  $ 2,535   $ 2,457     3 % $ 7,474   $ 7,314     2 %
                           

Institutional Clients Group

  $ 8,128   $ 7,348     11 % $ 27,025   $ 31,106     (13 )%
                           
   

Total Citicorp

  $ 16,289   $ 13,468     21 % $ 51,300   $ 49,780     3 %
                           

CITI HOLDINGS

                                     

Brokerage and Asset Management

  $ (8 ) $ 525     NM   $ 473   $ 14,352     (97 )%

Local Consumer Lending

    3,547     4,362     (19 )%   12,423     13,864     (10 )

Special Asset Pool

    314     1,363     (77 )   2,426     (3,547 )   NM  
                           

Total Citi Holdings

  $ 3,853   $ 6,250     (38 )% $ 15,322   $ 24,669     (38 )%
                           

Corporate/Other

  $ 596   $ 672     (11 )% $ 1,608   $ 431     NM  
                           

Total net revenues

  $ 20,738   $ 20,390     2 % $ 68,230   $ 74,880     (9 )%
                           
 

Impact of Credit Card Securitization Activity

                                     
   

Citicorp

  $   $ 1,800     NM   $   $ 4,928     NM  
   

Citi Holdings

        952     NM         3,402     NM  
                           

Total impact of credit card securitization activity

  $   $ 2,752     NM   $   $ 8,330     NM  
                           

Total Citigroup—managed net revenues

  $ 20,738   $ 23,142     (10 )% $ 68,230   $ 83,210     (18 )%
                           

(1)
See discussion of adoption of SFAS 166/167 on page 3 and in Note 1 to the Consolidated Financial Statements.

NM    Not meaningful

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CITICORP

        Citicorp is the company's global bank for consumers and businesses and represents Citi's core franchise. Citicorp is focused on providing best-in-class products and services to customers and leveraging Citigroup's unparalleled global network. Citicorp is physically present in approximately 100 countries, many for over 100 years, and offers services in over 160 countries and jurisdictions. Citi believes this global network provides a strong foundation for servicing the broad financial services needs of large multinational clients and for meeting the needs of retail, private banking, commercial and institutional customers around the world. Citigroup's global footprint provides coverage of the world's emerging economies, which Citi believes represent a strong area of growth. At September 30, 2010, Citicorp had approximately $1.3 trillion of assets and $757 billion of deposits, representing approximately 65% of Citi's total assets and approximately 89% of its deposits.

        Citicorp consists of the following businesses: Regional Consumer Banking (which includes retail banking and Citi-branded cards in four regions—North America, EMEA, Latin America and Asia) and Institutional Clients Group (which includes Securities and Banking and Transaction Services).

 
  Third Quarter    
  Nine Months    
 
 
  %
Change
  %
Change
 
In millions of dollars   2010   2009   2010   2009  
 

Net interest revenue

  $ 9,475   $ 8,727     9 % $ 29,087   $ 26,012     12 %
 

Non-interest revenue

    6,814     4,741     44     22,213     23,768     (7 )
                           

Total revenues, net of interest expense

  $ 16,289   $ 13,468     21 % $ 51,300   $ 49,780     3 %
                           

Provisions for credit losses and for benefits and claims

                                     
 

Net credit losses

  $ 3,020   $ 1,734     74 % $ 9,127   $ 4,560     100 %
 

Credit reserve build (release)

    (427 )   522     NM     (1,426 )   2,751     NM  
                           
 

Provision for loan losses

  $ 2,593   $ 2,256     15 % $ 7,701   $ 7,311     5 %
 

Provision for benefits and claims

    38     43     (12 )   109     127     (14 )
 

Provision for unfunded lending commitments

    1             (32 )   115     NM  
                           
   

Total provisions for credit losses and for benefits and claims

  $ 2,632   $ 2,299     14 % $ 7,778   $ 7,553     3 %
                           

Total operating expenses

  $ 8,883   $ 8,422     5 % $ 26,458   $ 23,889     11 %
                           

Income from continuing operations before taxes

  $ 4,774   $ 2,747     74 % $ 17,064   $ 18,338     (7 )%

Provisions for income taxes

    1,210     257     NM     4,543     4,781     (5 )
                           

Income from continuing operations

  $ 3,564   $ 2,490     43 % $ 12,521   $ 13,557     (8 )%

Net income (loss) attributable to noncontrolling interests

    30     25     20     71     25     NM  
                           

Citicorp's net income

  $ 3,534   $ 2,465     43 % $ 12,450   $ 13,532     (8 )%
                           

Balance sheet data (in billions of dollars)

                                     

Total EOP assets

  $ 1,283   $ 1,075     19 %                  

Average assets

    1,252     1,096     14   $ 1,245   $ 1,076     16 %

Return on assets

    1.12 %   0.89 %         1.34 %   1.68 %      

Total EOP deposits

    757     731     4                    
                           

Total GAAP revenues

  $ 16,289   $ 13,468     21 % $ 51,300   $ 49,780     3 %
 

Net impact of credit card securitization activity(1)

        1,800     NM         4,928     NM  
                           

Total managed revenues

  $ 16,289   $ 15,268     7 % $ 51,300   $ 54,708     (6 )%
                           

GAAP net credit losses

  $ 3,020   $ 1,734     74 % $ 9,127   $ 4,560     100 %
 

Impact of credit card securitization activity(1)

        1,876     NM       $ 5,204     NM  
                           

Total managed net credit losses

  $ 3,020   $ 3,610     (16 )% $ 9,127   $ 9,764     (7 )%
                           

(1)
See discussion of adoption of SFAS 166/167 on page 3 and in Note 1 to the Consolidated Financial Statements.

NM
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REGIONAL CONSUMER BANKING

        Regional Consumer Banking (RCB) consists of Citigroup's four regional consumer banking businesses that provide traditional banking services to retail customers. RCB also contains Citigroup's branded cards business and Citi's local commercial banking business. RCB is a globally diversified business with over 4,200 branches in 39 countries around the world. During the third quarter of 2010, 54% of total RCB revenues were from outside North America. Additionally, the majority of international revenues and loans were from emerging economies in Asia, Latin America, and Central and Eastern Europe and the Middle East. At September 30, 2010, RCB had $311 billion of assets and $300 billion of deposits.

 
  Third Quarter    
  Nine Months    
 
 
  %
Change
  %
Change
 
In millions of dollars   2010   2009   2010   2009  

Net interest revenue

  $ 5,689   $ 4,216     35 % $ 17,380   $ 12,198     42 %

Non-interest revenue

    2,472     1,904     30     6,895     6,476     6  
                           

Total revenues, net of interest expense

  $ 8,161   $ 6,120     33 % $ 24,275   $ 18,674     30 %
                           

Total operating expenses

  $ 4,087   $ 3,778     8 % $ 12,006   $ 10,985     9 %
                           
 

Net credit losses

  $ 2,731   $ 1,442     89 % $ 8,693   $ 4,022     NM  
 

Credit reserve build (release)

    (403 )   356     NM     (991 )   1,661     NM  
 

Provision for unfunded lending commitments

                (4 )        
 

Provisions for benefits and claims

    38     43     (12 )%   109     127     (14 )%
                           

Provisions for credit losses and for benefits and claims

  $ 2,366   $ 1,841     29 % $ 7,807   $ 5,810     34 %
                           

Income from continuing operations before taxes

  $ 1,708   $ 501     NM   $ 4,462   $ 1,879     NM  

Income taxes

    476     (203 )   NM     1,039     (40 )   NM  
                           

Income from continuing operations

  $ 1,232   $ 704     75 % $ 3,423   $ 1,919     78 %

Net income (loss) attributable to noncontrolling interests

    (4 )   2     NM     (9 )   2     NM  
                           

Net income

  $ 1,236   $ 702     76 % $ 3,432   $ 1,917     79 %
                           

Average assets (in billions of dollars)

  $ 311   $ 248     25 % $ 308   $ 239     29 %

Return on assets

    1.58 %   1.12 %         1.49 %   1.07 %      

Average deposits (in billions of dollars)

    296     279     6 %                  
                           

Managed net credit losses as a percentage of average managed loans

    4.90 %   5.97 %                        
                           

Revenue by business

                                     
 

Retail banking

  $ 4,005   $ 3,760     7 % $ 11,735   $ 11,086     6 %
 

Citi-branded cards

    4,156     2,360     76     12,540     7,588     65  
                           
   

Total GAAP revenues

  $ 8,161   $ 6,120     33 % $ 24,275   $ 18,674     30 %
 

Net impact of credit card securitization activity(1)

        1,800     NM         4,928     NM  
                           
 

Total managed revenues

  $ 8,161   $ 7,920     3 % $ 24,275   $ 23,602     3 %
                           

Net credit losses by business

                                     
 

Retail banking

  $ 333   $ 395     (16 )% $ 926   $ 1,161     (20 )%
 

Citi-branded cards

    2,398     1,047     NM     7,767     2,861     NM  
                           
   

Total GAAP net credit losses

  $ 2,731   $ 1,442     89 % $ 8,693   $ 4,022     NM  
 

Net impact of credit card securitization activity(1)

        1,876     NM         5,204     NM  
                           
 

Total managed net credit losses

  $ 2,731   $ 3,318     (18 )% $ 8,693   $ 9,226     (6 )%
                           

Income (loss) from continuing operations by business

                                     
 

Retail banking

  $ 778   $ 698     11 % $ 2,510   $ 1,983     27 %
 

Citi-branded cards

    454     6     NM     913     (64 )   NM  
                           
   

Total

  $ 1,232   $ 704     75 % $ 3,423   $ 1,919     78 %
                           

(1)
See discussion of adoption of SFAS 166/167 on page 3 and in Note 1 to the Consolidated Financial Statements.

NM
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NORTH AMERICA REGIONAL CONSUMER BANKING

        North America Regional Consumer Banking (NA RCB) provides traditional banking and Citi-branded card services to retail customers and small- to mid-size businesses in the U.S. NA RCB's approximately 1,000 retail bank branches and 13.3 million retail customer accounts are largely concentrated in the greater metropolitan areas of New York, Los Angeles, San Francisco, Chicago, Miami, Washington, D.C., Boston, Philadelphia, and certain larger cities in Texas. At September 30, 2010, NA RCB had approximately $29 billion of retail banking and residential real estate loans and $144 billion of deposits. In addition, NA RCB had approximately 21 million Citi-branded credit card accounts, with $77 billion in outstanding card loan balances.

 
  Third Quarter    
  Nine Months    
 
 
  %
Change
  %
Change
 
In millions of dollars   2010   2009   2010   2009  

Net interest revenue

  $ 2,734   $ 1,387     97 % $ 8,466   $ 3,909     NM  

Non-interest revenue

    1,006     630     60     2,768     2,793     (1 )%
                           

Total revenues, net of interest expense

  $ 3,740   $ 2,017     85 % $ 11,234   $ 6,702     68 %
                           

Total operating expenses

  $ 1,501   $ 1,499       $ 4,611   $ 4,479     3 %
                           
 

Net credit losses

  $ 1,971   $ 279     NM   $ 6,254   $ 843     NM  
 

Credit reserve build

    40     54     (26 )%   35     456     (92 )%
 

Provisions for benefits and claims

    6     14     (57 )   19     42     (55 )
                           

Provisions for loan losses and for benefits and claims

  $ 2,017   $ 347     NM   $ 6,308   $ 1,341     NM  
                           

Income from continuing operations before taxes

  $ 222   $ 171     30 % $ 315   $ 882     (64 )%

Income taxes (benefits)

    75     (35 )   NM     84     180     (53 )
                           

Income from continuing operations

  $ 147   $ 206     (29 )% $ 231   $ 702     (67 )%

Net income attributable to noncontrolling interests

                         
                           

Net income

  $ 147   $ 206     (29 )% $ 231   $ 702     (67 )%
                           

Average assets (in billions of dollars)

  $ 118   $ 75     57 % $ 119   $ 74     61 %

Average deposits (in billions of dollars)

    145     142     2                    
                           

Managed net credit losses as a percentage of average managed loans(1)

    7.40 %   7.31 %                        
                           

Revenue by business

                                     
 

Retail banking

  $ 1,372   $ 1,333     3 % $ 3,975   $ 4,005     (1 )%
 

Citi-branded cards(2)

    2,368     684     NM     7,259     2,697     NM  
                           
   

Total GAAP revenues

  $ 3,740   $ 2,017     85 % $ 11,234   $ 6,702     68 %
 

Net impact of credit card securitization activity(2)

        1,800     NM         4,928     NM  
                           
 

Total managed revenues

  $ 3,740   $ 3,817     (2 )% $ 11,234   $ 11,630     (3 )%
                           

Net credit losses by business

                                     
 

Retail banking

  $ 90   $ 78     15 % $ 242   $ 222     9 %
 

Citi-branded cards(2)

    1,881     201     NM   $ 6,012     621     NM  
                           
   

Total GAAP net credit losses

  $ 1,971   $ 279     NM   $ 6,254   $ 843     NM  
 

Net impact of credit card securitization activity(2)

        1,876     NM         5,204     NM  
                           
 

Total managed net credit losses

  $ 1,971   $ 2,155     (9 )% $ 6,254   $ 6,047     3 %
                           

Income (loss) from continuing operations by business

                                     
 

Retail banking

  $ 189   $ 193     (2 )% $ 598   $ 676     (12 )%
 

Citi-branded cards

    (42 )   13     NM     (367 )   26     NM  
                           
   

Total

  $ 147   $ 206     (29 )% $ 231   $ 702     (67 )%
                           

(1)
See "Managed Presentations" below.

(2)
See discussion of adoption of SFAS 166/167 on page 3 and in Note 1 to the Consolidated Financial Statements.

NM
Not meaningful

3Q10 vs. 3Q09

        Revenues, net of interest expense, increased 85% primarily due to the consolidation of securitized credit card receivables pursuant to the adoption of SFAS 166/167 effective January 1, 2010. On a managed basis, revenues, net of interest expense, decreased 2%, primarily reflecting the impact of the CARD Act on branded cards revenues, partially offset by improved revenues in mortgages due to an increase in originations in the current quarter (the vast majority of which were originated for sale).

        Net interest revenue was down 11% on a managed basis driven by the impact of the CARD Act as well as lower volumes in cards, where average managed loans were down 8% from the prior-year quarter. This decline was partially offset by lower write-offs of accrued interest in cards as credit continued to improve. A decrease in deposit spreads in the current interest rate environment was partially offset by higher deposit volumes, up 2% from the prior-year quarter.

        Non-interest revenue increased 33% on a managed basis primarily due to higher gains on mortgage sales resulting from

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increased originations, which were up 56% from the prior-year quarter.

        Operating expenses were flat compared to the prior-year quarter as increased investment spending was offset by the one-time benefit related to the renegotiation of a third-party contract.

        Provisions for loan losses and for benefits and claims increased $1.7 billion primarily due to the consolidation of securitized credit card receivables pursuant to the adoption of SFAS 166/167. On a comparable basis, Provisions for loan losses and for benefits and claims decreased $206 million, or 9%, from the prior-year quarter primarily due to lower net credit losses in cards as underlying credit trends in the cards portfolio continued to improve. The cards managed net credit loss ratio decreased 16 basis points to 9.82%.

3Q10 YTD vs. 3Q09 YTD

        Revenues, net of interest expense, increased 68% primarily due to the consolidation of securitized credit card receivables pursuant to the adoption of SFAS 166/167 effective January 1, 2010. On a managed basis, revenues, net of interest expense, declined 3% from the prior-year period, mainly due to lower volumes in branded cards, as well as the net impact of the CARD Act on cards revenues. This decrease was partially offset by better servicing hedge results in mortgages.

        Net interest revenue was down 7% on a managed basis driven primarily by lower volumes in cards, with average managed loans down 6% from the prior-year period. The increase in deposit volumes, up 5% from the prior-year period, was offset by lower spreads in the current interest rate environment.

        Non-interest revenue increased 9% on a managed basis from the prior-year period mainly driven by better servicing hedge results in mortgages.

        Operating expenses increased 3% from the prior-year period. Expenses were fairly flat excluding the impact of a litigation reserve in the first quarter of 2010.

        Provisions for loan losses and for benefits and claims increased $5.0 billion primarily due to the consolidation of securitized credit card receivables pursuant to the adoption of SFAS 166/167. On a comparable basis, Provisions for loan losses and for benefits and claims decreased $237 million, or 4%, primarily due to a lower loan loss reserve build, down $421 million from the prior-year period, offset by higher net credit losses in the branded cards portfolio, which increased $187 million. The cards managed net credit loss ratio increased 98 basis points to 10.43%.

Managed Presentations

 
  Third Quarter  
 
  2010   2009  

Managed credit losses as a percentage of average managed loans

    7.40 %   7.31 %

Impact from credit card securitizations(1)

        (4.91 )%
           

Net credit losses as a percentage of average loans

    7.40 %   2.40 %
           

(1)
See discussion of adoption of SFAS 166/167 on page 3 and in Note 1 to the Consolidated Financial Statements.

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EMEA REGIONAL CONSUMER BANKING

        EMEA Regional Consumer Banking (EMEA RCB) provides traditional banking and Citi-branded card services to retail customers and small- to mid-size businesses, primarily in Central and Eastern Europe, the Middle East and Africa. Remaining activities in respect of Western Europe retail banking are included in Citi Holdings. EMEA RCB has generally repositioned its business, shifting from a strategy of widespread distribution to a focused strategy concentrating on larger urban markets within the region. An exception is Bank Handlowy, which has a mass market presence in Poland. The countries in which EMEA RCB has the largest presence are Poland, Turkey, Russia and the United Arab Emirates. At September 30, 2010, EMEA RCB had approximately 300 retail bank branches with approximately 4 million customer accounts, $5 billion in retail banking loans and $9 billion in average deposits. In addition, the business had approximately 3 million Citi-branded card accounts with $3 billion in outstanding card loan balances.

 
  Third Quarter    
  Nine Months    
 
 
  %
Change
  %
Change
 
In millions of dollars   2010   2009   2010   2009  

Net interest revenue

  $ 222   $ 262     (15 )% $ 700   $ 729     (4 )%

Non-interest revenue

    127     153     (17 )   430     440     (2 )
                           

Total revenues, net of interest expense

  $ 349   $ 415     (16 )% $ 1,130   $ 1,169     (3 )%
                           

Total operating expenses

  $ 303   $ 270     12 % $ 848   $ 808     5 %
                           
 

Net credit losses

  $ 65   $ 139     (53 )% $ 247   $ 349     (29 )%
 

Provision for unfunded lending commitments

                (4 )        
 

Credit reserve build (release)

    (51 )   67     NM     (107 )   297     NM  
 

Provisions for benefits and claims

                         
                           

Provisions for credit losses and for benefits and claims

  $ 14   $ 206     (93 )% $ 136   $ 646     (79 )%
                           

Income (loss) from continuing operations before taxes

  $ 32   $ (61 )   NM   $ 146   $ (285 )   NM  

Income taxes (benefits)

    10     (38 )   NM     47     (119 )   NM  
                           

Income (loss) from continuing operations

  $ 22   $ (23 )   NM   $ 99   $ (166 )   NM  

Net income (loss) attributable to noncontrolling interests

    (1 )   2     NM     (1 )   2     NM  
                           

Net income (loss)

  $ 23   $ (25 )   NM   $ 100   $ (168 )   NM  
                           

Average assets (in billions of dollars)

  $ 10   $ 11     (9 )% $ 10   $ 11     (9 )%

Return on assets

    0.91 %   (0.90 )%         1.34 %   (2.04 )%      

Average deposits (in billions of dollars)

    9     10     (4 )                  
                           

Net credit losses as a percentage of average loans

    3.53 %   6.34 %                        
                           

Revenue by business

                                     
 

Retail banking

  $ 186   $ 237     (22 )% $ 613   $ 676     (9 )%
 

Citi-branded cards

    163     178     (8 )   517     493     5  
                           
   

Total

  $ 349   $ 415     (16 )% $ 1,130   $ 1,169     (3 )%
                           

Income (loss) from continuing operations by business

                                     
 

Retail banking

  $ (18 ) $ (23 )   22 % $ (15 ) $ (140 )   89 %
 

Citi-branded cards

    40             114     (26 )   NM  
                           
   

Total

  $ 22   $ (23 )   NM   $ 99   $ (166 )   NM  
                           

NM
Not meaningful

3Q10 vs. 3Q09

        Revenues, net of interest expense, decreased 16%. A majority of the decrease was due to lower results from Citi's equity investment in Akbank, lower lending revenues due to credit tightening and FX translation. This was partially offset by higher revenues in wealth management. Cards purchase sales were up 5% and investment sales were up 20%. Assets under management increased 10% primarily due to market valuations and the introduction of new, regional initiatives.

        Net interest revenue decreased 15%, primarily due to lower volumes due to tighter origination criteria and various promotions aimed at client acquisition.

        Non-interest revenue decreased 17% due to lower results from Citi's equity investment in Akbank.

        Operating expenses increased 12% reflecting increased investments and marketing expenditures in the business.

        Provisions for credit losses and for benefits and claims decreased 93% mainly due to the impact of a $51 million loan loss reserve release in the current quarter, compared to a $67 million build in the prior-year quarter, and a 53% decline in net credit losses, driven by credit improvements across most markets. The release of loan loss reserves in the current period was driven by improvement in credit in most countries coupled with a decline in receivables. The cards net credit loss ratio improved to 4.39% in the current quarter from 7.27% and there was a 7% improvement in the net credit margin. The retail banking net credit loss ratio decreased from 5.85% in the prior-year quarter to 3.00% in the current quarter.

3Q10 YTD vs. 3Q09 YTD

        Revenues, net of interest expense, decreased 3%. The decrease in revenue was primarily attributable to lower retail bank lending revenues as a result of lower volumes, which were due to tighter origination criteria. This was partially offset by FX translation and higher revenues in cards due to higher volumes. Cards purchase sales increased 10%.

        Net interest revenue decreased 4%, mainly due to a decline in volumes as a result of tighter origination criteria.

        Non-interest revenue decreased 2%, primarily driven by a litigation reserve build in the first half of 2010.

        Operating expenses increased 5% driven by the impact of FX translation and increased investment in the business, largely offset by cost savings from branch closures, headcount reductions and re-engineering benefits.

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        Provisions for credit losses and for benefits and claims decreased 79% mainly due to the impact of a $107 million loan loss reserve release in the first nine months of 2010, compared to a $297 million build in the prior-year period, as well as a 29% decline in net credit losses. The release of loan loss reserves in the current period was driven by an improvement in credit in most countries coupled with a decline in receivables.

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LATIN AMERICA REGIONAL CONSUMER BANKING

        Latin America Regional Consumer Banking (LATAM RCB) provides traditional banking and Citi-branded card services to retail customers and small- to mid-size businesses, with the largest presence in Mexico and Brazil. LATAM RCB includes branch networks throughout Latin America as well as Banco Nacional de Mexico, or Banamex, Mexico's second largest bank with over 1,700 branches. At September 30, 2010, LATAM RCB had approximately 2,215 retail branches, with 27 million customer accounts, $21 billion in retail banking loan balances and $41 billion in average deposits. In addition, the business had approximately 12 million Citi-branded card accounts with $13 billion in outstanding loan balances.

 
  Third Quarter    
  Nine Months    
 
 
  %
Change
  %
Change
 
In millions of dollars   2010   2009   2010   2009  

Net interest revenue

  $ 1,501   $ 1,366     10 % $ 4,430   $ 4,009     11 %

Non-interest revenue

    732     605     21     1,997     1,836     9  
                           

Total revenues, net of interest expense

  $ 2,233   $ 1,971     13 % $ 6,427   $ 5,845     10 %
                           

Total operating expenses

  $ 1,258   $ 1,127     12 % $ 3,666   $ 3,175     15 %
                           
 

Net credit losses

  $ 450   $ 657     (32 )% $ 1,416   $ 1,808     (22 )%
 

Credit reserve build (release)

    (300 )   141     NM     (677 )   463     NM  
 

Provision for benefits and claims

    32     29     10     90     85     6  
                           

Provisions for loan losses and for benefits and claims

  $ 182   $ 827     (78 )% $ 829   $ 2,356     (65 )%
                           

Income from continuing operations before taxes

  $ 793   $ 17     NM   $ 1,932   $ 314     NM  

Income taxes

    235     (60 )   NM     494     (98 )   NM  
                           

Income from continuing operations

  $ 558   $ 77     NM   $ 1,438   $ 412     NM  

Net (loss) attributable to noncontrolling interests

    (3 )           (8 )        
                           

Net income

  $ 561   $ 77     NM   $ 1,446   $ 412     NM  
                           

Average assets (in billions of dollars)

  $ 74   $ 66     12 % $ 73   $ 64     14 %

Return on assets

    3.01 %   0.46 %         2.65 %   0.86 %      

Average deposits (in billions of dollars)

    41     36     13                    
                           

Net credit losses as a percentage of average loans

    5.48 %   8.99 %                        
                           

Revenue by business

                                     
 

Retail banking

  $ 1,300   $ 1,114     17 % $ 3,732   $ 3,252     15 %
 

Citi-branded cards

    933     857     9     2,695     2,593     4  
                           
   

Total

  $ 2,233   $ 1,971     13 % $ 6,427   $ 5,845     10 %
                           

Income (loss) from continuing operations by business

                                     
 

Retail banking

  $ 277   $ 154     80 % $ 808   $ 580     39 %
 

Citi-branded cards

    281     (77 )   NM     630     (168 )   NM  
                           
   

Total

  $ 558   $ 77     NM   $ 1,438   $ 412     NM  
                           

NM
Not meaningful

3Q10 vs. 3Q09

        Revenues, net of interest expense, increased 13% mainly due to higher lending and deposit volumes as well as better margins in retail banking and, in cards, higher ANR and fees from new account acquisitions as well as the impact of FX translation.

        Net interest revenue increased 10%, mainly driven by higher lending and deposit volumes in retail banking and the impact of FX translation. Average retail banking loans and deposits increased 20% and 13%, respectively. The increases were also spurred by better spreads and positive FX translation.

        Non-interest revenue increased 21%, primarily due to higher fees in the cards business and the impact of FX translation.

        Operating expenses increased 12%, mainly due to the investments initiatives for account acquisitions in cards, the prior-year quarter's release of legal reserves and excess restructuring provisions, and the impact of FX translation.

        Provisions for loan losses and for benefits and claims decreased 78%, mainly due to the impact of a $300 million loan loss reserve release in the current period, compared to a $141 million build in the same period last year, and a 32% decline in net credit losses, reflecting improved credit conditions, especially in Mexico cards. The cards net credit loss ratio declined across the region during the period, from 17.80% to 10.39%, reflecting continued economic recovery. The retail banking net credit loss ratio dropped from 2.68% to 2.50%.

3Q10 YTD vs. 3Q09 YTD

        Revenues, net of interest expense, increased 10%, mainly due to higher lending and deposit volumes in retail banking aided by a moderate increase in cards loans volumes and the impact of FX translation.

        Net interest revenue increased 11%, mainly driven by higher lending and deposit volumes in retail banking. Average retail banking loans and deposits increased 21% and 13%, respectively. Additionally, cards ANR moderately increased and there was a positive FX translation.

        Non-interest revenue increased 9%, due to higher fees in the cards business and the impact of FX translation.

        Provisions for loan losses and for benefits and claims decreased 65%, mainly due to the impact of a net loan loss reserve release of $677 million year-to-date 2010, compared to a $463 million build in the same period last year, and a 22% decline in net credit losses, reflecting improved credit conditions, especially in Mexico cards. The cards net credit

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loss ratio declined from 16.36% to 12.14%, while the retail banking net credit loss ratio declined from 3.01% to 2.17%.

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ASIA REGIONAL CONSUMER BANKING

        Asia Regional Consumer Banking (Asia RCB) provides traditional banking and Citi-branded card services to retail customers and small- to mid-size businesses, with the largest Citi presence in South Korea, Japan, Taiwan, Singapore, Australia, Hong Kong, India and Indonesia. At September 30, 2010, Asia RCB had approximately 707 retail branches, 16 million retail banking accounts, $101 billion in average customer deposits, and $59 billion in retail banking loans. In addition, the business had approximately 15 million Citi-branded card accounts with $19 billion in outstanding loan balances.

 
  Third Quarter    
  Nine Months    
 
 
  %
Change
  %
Change
 
In millions of dollars   2010   2009   2010   2009  

Net interest revenue

  $ 1,232   $ 1,201     3 % $ 3,784   $ 3,551     7 %

Non-interest revenue

    607     516     18     1,700     1,407     21  
                           

Total revenues, net of interest expense

  $ 1,839   $ 1,717     7 % $ 5,484   $ 4,958     11 %
                           

Total operating expenses

  $ 1,025   $ 882     16 % $ 2,881   $ 2,523     14 %
                           
 

Net credit losses

  $ 245   $ 367     (33 )% $ 776   $ 1,022     (24 )%
 

Credit reserve build (release)

    (92 )   94     NM     (242 )   445     NM  
                           

Provisions for loan losses and for benefits and claims

  $ 153   $ 461     (67 )% $ 534   $ 1,467     (64 )%
                           

Income from continuing operations before taxes

  $ 661   $ 374     77 % $ 2,069   $ 968     NM  

Income taxes

    156     (70 )   NM     414     (3 )   NM  
                           

Income from continuing operations

  $ 505   $ 444     14 % $ 1,655   $ 971     70 %

Net income attributable to noncontrolling interests

                         
                           

Net income

  $ 505   $ 444     14 % $ 1,655   $ 971     70 %
                           

Average assets (in billions of dollars)

  $ 109   $ 96     14 % $ 106   $ 90     18 %

Return on assets

    1.84 %   1.83 %         2.09 %   1.44 %      

Average deposits (in billions of dollars)

    101     91     11                    
                           

Net credit losses as a percentage of average loans

    1.29 %   2.21 %                        
                           

Revenue by business

                                     
 

Retail banking

  $ 1,147   $ 1,076     7 % $ 3,415   $ 3,153     8 %
 

Citi-branded cards

    692     641     8     2,069     1,805     15  
                           
   

Total

  $ 1,839   $ 1,717     7 % $ 5,484   $ 4,958     11 %
                           

Income from continuing operations by business

                                     
 

Retail banking

  $ 330   $ 374     (12 )% $ 1,119   $ 867     29 %
 

Citi-branded cards

    175     70     NM     536     104     NM  
                           
   

Total

  $ 505   $ 444     14 % $ 1,655   $ 971     70 %
                           

NM
Not meaningful

3Q10 vs. 3Q09

        Revenues, net of interest expense, increased 7%, reflecting higher cards purchase sales, investment sales, loan and deposit volumes, and the impact of FX translation, partially offset by lower spreads.

        Net interest revenue was 3% higher than the prior-year period, mainly due to higher lending and deposit volumes and the impact of FX translation, partially offset by lower spreads. Average loans and deposits were up 15% and 11%, respectively.

        Non-interest revenue increased 18%, primarily due to higher investment revenues, higher cards purchase sales, and the impact of FX translation.

        Operating expenses increased 16%, primarily due to the increase in volumes and higher investment spending, and the impact of FX translation.

        Provisions for loan losses and for benefits and claims decreased 67%, mainly due to the impact of a $92 million loan loss reserve release in the current quarter, compared to a $94 million loan loss reserve build in the prior-year quarter, and a decrease in net credit losses of 33%. These declines were partially offset by the impact of FX translation. Delinquencies and net credit losses continued to decline from their peak level in the second quarter of 2009 as the region benefitted from continued economic recovery and increased levels of customer activity. The cards net credit loss ratio decreased from 5.89% in the prior-year quarter to 3.54% in the current quarter. The retail banking net credit loss ratio decreased from 0.96% in the prior-year quarter to 0.56% in the current quarter.

3Q10 YTD vs. 3Q09 YTD

        Revenues, net of interest expense, increased 11%, driven by higher cards purchase sales, investment sales and loan and deposit volumes, and the impact of FX translation, partially offset by lower spread.

        Net interest revenue was 7% higher than the prior-year period, mainly due to higher lending and deposit volumes and the impact of FX translation, partially offset by lower spreads.

        Non-interest revenue increased 21%, primarily due to higher investment revenues, higher cards purchase sales, and the impact of FX translation.

        Operating expenses increased 14%, primarily due to increase in volumes, continued investment spending, and the impact of FX translation.

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        Provisions for loan losses and for benefits and claims decreased 64%, mainly due to the impact of a net loan loss reserve release of $242 million in the first nine months of 2010, compared to a $445 million loan loss reserve build in the prior-year period, and a 24% decline in net credit losses. These declines were partially offset by the impact of FX translation. The decrease in provisions for loan losses and for benefits and claims reflects continued credit quality improvement across the region, particularly in India and South Korea.

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INSTITUTIONAL CLIENTS GROUP

        Institutional Clients Group (ICG) includes Securities and Banking and Transaction Services. ICG provides corporate, institutional and ultra-high net worth clients with a full range of products and services, including cash management, trading, underwriting, lending and advisory services, around the world. ICG's international presence is supported by trading floors in approximately 75 countries and a proprietary network within Transaction Services in over 95 countries. At September 30, 2010, ICG had approximately $963 billion of assets and $457 billion of deposits.

 
  Third Quarter    
  Nine Months    
 
 
  %
Change
  %
Change
 
In millions of dollars   2010   2009   2010   2009  

Commissions and fees

  $ 1,016   $ 1,122     (9 )% $ 3,210   $ 3,100     4 %

Administration and other fiduciary fees

    672     702     (4 )   2,008     2,122     (5 )

Investment banking

    829     1,066     (22 )   2,374     3,247     (27 )

Principal transactions

    982     (571 )   NM     5,958     7,259     (18 )

Other

    843     518     63     1,768     1,564     13  
                           
 

Total non-interest revenue

  $ 4,342   $ 2,837     53 % $ 15,318   $ 17,292     (11 )%
 

Net interest revenue (including dividends)

    3,786     4,511     (16 )   11,707     13,814     (15 )
                           

Total revenues, net of interest expense

  $ 8,128   $ 7,348     11 % $ 27,025   $ 31,106     (13 )%

Total operating expenses

    4,796     4,644     3     14,452     12,904     12  
 

Net credit losses

    289     292     (1 )   434     538     (19 )
 

Provision for unfunded lending commitments

    1             (28 )   115     NM  
 

Credit reserve build (release)

    (24 )   166     NM     (435 )   1,090     NM  
 

Provisions for benefits and claims

                         
                           

Provisions for credit losses and for benefits and claims

  $ 266   $ 458     (42 )% $ (29 ) $ 1,743     NM  
                           

Income from continuing operations before taxes

  $ 3,066   $ 2,246     37 % $ 12,602   $ 16,459     (23 )%

Income taxes

    734     460     60     3,504     4,821     (27 )
                           

Income from continuing operations

  $ 2,332   $ 1,786     31 % $ 9,098   $ 11,638     (22 )%

Net income attributable to noncontrolling interests

    34     23     48     80     23     NM  
                           

Net income

  $ 2,298   $ 1,763     30 % $ 9,018   $ 11,615     (22 )%
                           

Average assets (in billions of dollars)

  $ 941   $ 848     11 % $ 937   $ 837     12 %

Return on assets

    0.97 %   0.82 %         1.29 %   1.86 %      
                           

Revenues by region

                                     
 

North America

  $ 2,823   $ 1,944     45 % $ 10,278   $ 9,926     4 %
 

EMEA

    2,568     3,047     (16 )   8,526     11,531     (26 )
 

Latin America

    1,023     1,042     (2 )   2,888     3,574     (19 )
 

Asia

    1,714     1,315     30     5,333     6,075     (12 )
                           

Total revenues

  $ 8,128   $ 7,348     11 % $ 27,025   $ 31,106     (13 )%
                           

Income from continuing operations by region

                                     
 

North America

  $ 587   $ 159     NM   $ 3,175   $ 2,943     8 %
 

EMEA

    810     858     (6 )%   2,821     4,451     (37 )
 

Latin America

    437     367     19     1,216     1,616     (25 )
 

Asia

    498     402     24     1,886     2,628     (28 )
                           

Total income from continuing operations

  $ 2,332   $ 1,786     31 % $ 9,098   $ 11,638     (22 )%
                           

Average loans by region (in billions of dollars)

                                     
 

North America

  $ 66   $ 49     35 %                  
 

EMEA

    38     43     (12 )                  
 

Latin America

    22     22                        
 

Asia

    37     27     37                    
                           

Total average loans

  $ 163   $ 141     16 %                  
                           

NM
Not meaningful

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SECURITIES AND BANKING

        Securities and Banking (S&B) offers a wide array of investment and commercial banking services and products for corporations, governments, institutional and retail investors, and ultra-high net worth individuals. S&B includes investment banking and advisory services, lending, debt and equity sales and trading, institutional brokerage, foreign exchange, structured products, cash instruments and related derivatives, and private banking. S&B revenue is generated primarily from fees for investment banking and advisory services, fees and interest on loans, fees and spread on foreign exchange, structured products, cash instruments and related derivatives, income earned on principal transactions, and fees and spreads on private banking services.

 
  Third Quarter    
  Nine Months    
 
 
  %
Change
  %
Change
 
In millions of dollars   2010   2009   2010   2009  

Net interest revenue

  $ 2,353   $ 3,118     (25 )% $ 7,488   $ 9,560     (22 )%

Non-interest revenue

    3,240     1,773     83     12,063     14,232     (15 )
                           

Revenues, net of interest expense

  $ 5,593   $ 4,891     14 % $ 19,551   $ 23,792     (18 )%

Total operating expenses

    3,566     3,503     2     10,901     9,601     14  
 

Net credit losses

    288     294     (2 )   431     540     (20 )
 

Provisions for unfunded lending commitments

    1             (28 )   115     NM  
 

Credit reserve build (release)

    (8 )   171     NM     (366 )   1,089     NM  
 

Provisions for benefits and claims

                         
                           

Provisions for credit losses and benefits and claims

  $ 281   $ 465     (40 ) $ 37   $ 1,744     (98 )%
                           

Income before taxes and noncontrolling interests

  $ 1,746   $ 923     89 % $ 8,613   $ 12,447     (31 )%

Income taxes (benefits)

    339     76     NM     2,315     3,626     (36 )
                           

Income from continuing operations

    1,407     847     66     6,298     8,821     (29 )

Net income attributable to noncontrolling interests

    29     18     61     65     19     NM  
                           

Net income

  $ 1,378   $ 829     66 % $ 6,233   $ 8,802     (29 )%
                           

Average assets (in billions of dollars)

  $ 869   $ 788     10 % $ 869   $ 778     12 %

Return on assets

    0.63 %   0.42 %         0.96 %   1.51 %      
                           

Revenues by region

                                     
 

North America

  $ 2,203   $ 1,301     69 % $ 8,383   $ 8,038     4 %
 

EMEA

    1,733     2,202     (21 )   6,010     8,982     (33 )
 

Latin America

    639     705     (9 )   1,804     2,554     (29 )
 

Asia

    1,018     683     49     3,354     4,218     (20 )
                           

Total revenues

  $ 5,593   $ 4,891     14 % $ 19,551   $ 23,792     (18 )%
                           

Income (loss) from continuing operations by region

                                     
 

North America

  $ 456   $ 7     NM   $ 2,719   $ 2,472     10 %
 

EMEA

    505     550     (8 )%   1,892     3,467     (45 )
 

Latin America

    266     219     21     735     1,158     (37 )
 

Asia

    180     71     NM     952     1,724     (45 )
                           

Total income from continuing operations

  $ 1,407   $ 847     66 % $ 6,298   $ 8,821     (29 )%
                           

Securities and Banking revenue details

                                     
 

Fixed income markets

  $ 3,501   $ 4,024     (13 )% $ 12,594   $ 19,616     (36 )%
 

Investment banking

    930     1,164     (20 )   2,661     3,308     (20 )
 

Equity markets

    1,040     446     NM     2,905     3,152     (8 )
 

Lending

    (18 )   (794 )   98     747     (2,261 )   NM  
 

Private Bank

    497     522     (5 )   1,503     1,507      
 

Other Securities and Banking

    (357 )   (471 )   24     (859 )   (1,530 )   44  
                           

Total Securities and Banking revenues

  $ 5,593   $ 4,891     14 % $ 19,551   $ 23,792     (18 )%
                           

NM
Not meaningful

3Q10 vs. 3Q09

        Revenues, net of interest expense, were $5.6 billion, compared to $4.9 billion in the prior-year quarter, resulting from an increase in CVA, lending and advisory revenues, partially offset by a decrease in fixed income markets, debt and equity underwriting, equity markets and Private Bank revenues. CVA was $99 million in the third quarter of 2010, reflecting derivative CVA gains as corporate spreads tightened during the quarter. CVA of negative $1.8 billion in the third quarter of 2009 was driven by narrowing of Citigroup spreads during the period. Lending revenues increased from negative $0.8 billion to negative $18 million, due to lower losses on credit default swap hedges. Fixed income markets revenues (excluding CVA, net of hedges, of $0.1 billion and negative $0.8 billion in the current quarter and prior-year quarter, respectively) declined $1.5 billion to $3.4 billion, with a majority of the decline coming from weaker results in Credit Products, Securitized Products and G10 Rates trading, which reflected a challenging market environment. This was partially offset by strong performance in emerging markets. Equity markets revenues (excluding CVA, net of hedges, of

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negative $22 million and negative $0.9 billion in the current quarter and prior-year quarter, respectively), decreased $0.3 billion to $1.1 billion, driven by lower client activity levels. Investment banking revenues decreased $0.2 billion to $0.9 billion, reflecting lower levels of market activity in debt and equity underwriting, partially offset by an increase in advisory revenues resulting from increased M&A transaction volume and improvement in completed M&A market share.

        Operating expenses increased 2%, or $63 million, to $3.6 billion, reflecting select investments in the businesses.

        Provisions for loan losses and for benefits and claims decreased by $0.2 billion to $0.3 billion, primarily attributable to the impact of a $7 million credit reserve release in the current quarter, compared to a $171 million build in the prior-year quarter, as improvements continued in the corporate loan portfolio.

3Q10 YTD vs. 3Q09 YTD

        Revenues, net of interest expense for the current period were $19.6 billion, compared to $23.8 billion for the prior-year period, which was a particularly strong nine months driven by robust fixed income markets and higher client activity levels in investment banking. The decrease was partially offset by an increase in lending revenues, due to gains on credit default swap hedges. Revenue declines were also partially offset by an increase in CVA.

        Operating expenses increased 14%, or $1.3 billion, to $10.9 billion, mainly driven by higher compensation costs, the U.K. bonus tax in the second quarter of 2010 and a net change in the litigation reserve releases.

        Provisions for loan losses and for benefits and claims decreased by $1.7 billion to $37 million primarily attributable to the impact of a $394 million credit reserve release in the current period, compared to a $1.2 billion build in the prior-year period, as the market environment showed signs of stabilization.

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TRANSACTION SERVICES

        Transaction Services is composed of Treasury and Trade Solutions (TTS) and Securities and Fund Services (SFS). TTS provides comprehensive cash management and trade finance for corporations, financial institutions and public sector entities worldwide. SFS provides custody and funds services to investors such as insurance companies, mutual funds and hedge funds, clearing services to intermediaries such as broker-dealers, and depository and agency/trust services to multinational corporations and governments globally. Revenue is generated from net interest revenue on deposits in TTS and SFS, as well as from trade loans and from fees for transaction processing and fees on assets under custody in SFS.

 
  Third Quarter    
  Nine Months    
 
 
  %
Change
  %
Change
 
In millions of dollars   2010   2009   2010   2009  

Net interest revenue

  $ 1,433   $ 1,393     3 % $ 4,219   $ 4,254     (1 )%

Non-interest revenue

    1,102     1,064     4     3,255     3,060     6  
                           

Total revenues, net of interest expense

  $ 2,535   $ 2,457     3 % $ 7,474   $ 7,314     2 %

Total operating expenses

    1,230     1,141     8     3,551     3,303     8  

Provisions for loan losses and for benefits and claims

    (15 )   (7 )   NM     (66 )   (1 )   NM  
                           

Income before taxes and noncontrolling interests

  $ 1,320   $ 1,323       $ 3,989   $ 4,012     (1 )%

Income taxes

    395     384     3     1,189     1,195     (1 )
                           

Income from continuing operations

    925     939     (1 )   2,800     2,817     (1 )

Net income attributable to noncontrolling interests

    5     5         15     4     NM  
                           

Net income

  $ 920   $ 934     (1 )% $ 2,785   $ 2,813     (1 )%
                           

Average assets (in billions of dollars)

    72     60     20 %   68     59     15 %

Return on assets

    5.07 %   6.18 %         5.48 %   6.37 %      
                           

Revenues by region

                                     
 

North America

  $ 620   $ 643     (4 )% $ 1,895   $ 1,888      
 

EMEA

    835     845     (1 )   2,516     2,549     (1 )%
 

Latin America

    384     337     14     1,084     1,020     6  
 

Asia

    696     632     10     1,979     1,857     7  
                           

Total revenues

  $ 2,535   $ 2,457     3 % $ 7,474   $ 7,314     2 %
                           

Revenue details

                                     
 

Treasury and Trade Solutions

  $ 1,846   $ 1,794     3 % $ 5,432   $ 5,337     2 %
 

Securities and Fund Services

    689     663     4     2,042     1,977     3  
                           

Total revenues

  $ 2,535   $ 2,457     3 % $ 7,474   $ 7,314     2 %
                           

Income from continuing operations by region

                                     
 

North America

  $ 131   $ 152     (14 )% $ 456   $ 471     (3 )%
 

EMEA

    305     308     (1 )   929     984     (6 )
 

Latin America

    171     148     16     481     458     5  
 

Asia

    318     331     (4 )   934     904     3  
                           

Total income from continuing operations

  $ 925   $ 939     (1 )% $ 2,800   $ 2,817     (1 )%
                           

Key indicators

                                     

Average deposits and other customer liability balances (in billions of dollars)

  $ 340   $ 314     8 %                  

EOP assets under custody (in trillions of dollars)

    12.4     12.1     2                    
                           

NM
Not meaningful

3Q10 vs. 3Q09

        Revenues, net of interest expense, grew 3% with increases in both the TTS and SFS businesses. TTS revenue increased 3%, driven primarily by growth in Trade and Cards businesses as well as higher balances which more than offset spread compression. SFS revenues increased 4%, driven by higher fees as well as increased client activity.

        Operating expenses increased 8%, related to increased technology and other investment spend required to support future business growth.

        Provisions for loan losses and for benefits and claims declined by $8 million, primarily attributable to a credit reserve release of $16 million in the current quarter, reflecting the improved quality of the portfolio.

3Q10 YTD vs. 3Q09 YTD

        Revenues, net of interest expense, grew 2% as improvement in fees in both the TTS and SFS businesses more than offset spread compression. TTS revenue increased 2%, driven primarily by growth in Trade and Cards businesses. SFS revenues increased 3%, driven by higher fees as a result of growth in assets under custody and client activity.

        Operating expenses increased 8%, related to continued investment spend required to support future business growth, as well as higher transaction related costs.

        Provisions for loan losses and for benefits and claims declined by $65 million, primarily attributable to a credit reserve release of $69 million, reflecting the improved quality of the portfolio.

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CITI HOLDINGS

        Citi Holdings contains businesses and portfolios of assets that Citigroup has determined are not central to its core Citicorp businesses. These noncore businesses tend to be more asset intensive and reliant on wholesale funding and also may be product-driven rather than client-driven. Citi intends to exit these businesses as quickly as practicable in an economically rational manner through business divestitures, portfolio run-offs and asset sales.

        Citi has made substantial progress divesting and exiting businesses from Citi Holdings, having completed more than 30 divestiture transactions since the beginning of 2009 through September 30, 2010, including Smith Barney, Nikko Cordial Securities, Nikko Asset Management, Primerica Financial Services, various credit card businesses and Diners Club North America. During the third quarter of 2010, Citi announced sale of The Student Loan Corporation, which is currently expected to close in the fourth quarter of 2010. (The Student Loan Corporation is reported as Discontinued Operations within the Corporate/Other segment for the third quarter of 2010 only.) Citi Holdings' GAAP assets have been reduced by approximately 24%, or $135 billion, from the third quarter of 2009, and 49% from the peak in the first quarter of 2008. Citi Holdings' GAAP assets of $421 billion represent approximately 21% of Citi's assets as of September 30, 2010. Citi Holdings' risk-weighted assets of approximately $370 billion represent approximately 37% of Citi's risk-weighted assets as of September 30, 2010. Asset reductions from Citi Holdings have the combined benefits of further fortifying Citigroup's capital base, lowering risk, simplifying the organization and allowing Citi to allocate capital to fund long-term strategic businesses.

        Citi Holdings consists of the following businesses: Brokerage and Asset Management, Local Consumer Lending, and Special Asset Pool.

 
  Third Quarter    
  Nine Months    
 
 
  %
Change
  %
Change
 
In millions of dollars   2010   2009   2010   2009  

Net interest revenue

  $